Belling v. Emp't Sec. Dep't of State
| Decision Date | 12 September 2017 |
| Docket Number | No. 34066-0-III,34066-0-III |
| Court | Washington Court of Appeals |
| Parties | CHRISTOPHER BELLING, Appellant, v. EMPLOYMENT SECURITY DEPARTMENT of the State of Washington, Respondent. |
SIDDOWAY, J. — After Christopher Belling successfully appealed the Department of Labor and Industries' (DLI) termination of his workers' compensation benefits and was awarded retroactive benefits exceeding $48,000.00, the Employment Security Department (ESD) demanded the repayment of duplicative unemployment insurance benefits he received for the same period he was out of work. While he does not dispute that he was overpaid, Mr. Belling contended unsuccessfully in the administrative process, and argues in this appeal, that ESD should have waived repayment of 30 percent of the overpaid unemployment insurance benefits—the percentage of the award from DLI that he owed his lawyers as a contingent fee. He demonstrates no abuse of discretion by the ESD review commissioner, who found that (1) repayment of the unemployment insurance benefits would not leave him with less than his net recovery of workers compensation under the ESD's decision in In re Peltier1 and (2) he demonstrated no financial hardship basis supporting waiver of the repayment obligation. We affirm.
In 2005, Christopher Belling suffered a disabling workplace injury. As a result, DLI paid him time loss benefits of $1,486.00 twice each month. In March 2011, DLI notified him that it was terminating time loss payments based on its determination that he could work. It paid him $9,271.80 for a permanent partial disability, which compensated him for his future reduced capacity for work. Mr. Belling appealed the DLI decision to terminate his time loss benefits, with representation by a lawyer who agreed to handle the appeal on a 30 percent contingent fee basis.
Pending the appeal, Mr. Belling applied for unemployment insurance benefits. ESD paid Mr. Belling $22,924.00 in benefits from June 2011 to April 2012.
In June 2012, the DLI appeal was concluded by an order under which Mr. Belling's time loss benefits were reinstated through a lump sum payment of $48,251.19. In making payment, DLI deducted the permanent partial disability payment of $9,271.80 he had received in 2011. Mr. Belling paid his lawyers $14,475.36, which was their 30percent of the $48,251.19 recovery. He also reimbursed $5,255.21 in costs that his lawyers had advanced on his behalf.
Once notified that DLI had compensated Mr. Belling for the same period in which he had received unemployment insurance benefits, ESD demanded repayment of the $22,924.00 of benefits it had paid. Under RCW 50.20.085 a claimant may not concurrently receive unemployment compensation and DLI time loss payments.
Mr. Belling did not dispute that he had been overpaid, but a letter and notice of appeal from his lawyers took the position that ESD "is legally obligated to pay its share of attorney fees for the efforts that our office has taken to recover the retroactive time-loss benefits from [DLI]." Clerk's Papers (CP) at 102. Treating ESD as owing the 30 percent fee on the $22,924.00 it would recover as a result of the successful DLI appeal, Mr. Belling's lawyer tendered repayment of $16,046.80. At the hearing on Mr. Belling's appeal of ESD's determination that he must repay, he renewed his request that ESD waive his repayment obligation in an amount equal to its asserted pro rata responsibility for his contingent attorney fee.
The administrative law judge (ALJ) assigned to Mr. Belling's appeal acknowledged in her decision that when an unemployment compensation claimant is not "at fault" in causing the overpayment (and she found that Mr. Belling was not), "[ESD] may consider partial or full waiver of claimant's overpayment pursuant to the rationale in Delagrave v. Emp't Sec. Dep't, 127 Wn. App. 596, 111 P.3d 879 (2005), which allowspartial waiver on the basis of fairness." CP at 205. Although Mr. Belling argued that repayment to ESD of the full amount of unemployment insurance benefits would leave him with a net loss on his successful DLI appeal, the ALJ concluded otherwise. She also made the following finding as to financial hardship:
The claimant continues to receive $1,486 twice each month in time loss benefits from [DLI]. The claimant could at some point in the future receive another [p]ermanent partial [d]isability payout. The claimant also receives $1,700 per month in Social Security Disability Benefits. The claimant pays $600 per month in rent. He is responsible for no minor children. He "eats out a lot", and has no set grocery budget. The claimant has no debt in collections, and owns three vehicles. He pays $280 per week for his cell phone service.
CP at 204. She concluded that "repayment would not be unfair and repayment would not be against equity and good conscience." CP at 206.
Mr. Belling petitioned for review. The ESD review commissioner affirmed and adopted the ALJ's findings of fact and conclusions of law. Mr. Belling then appealed to the superior court, which modified the commissioner's decision, waiving $3,645.18 of the overpayment. In arriving at this amount, the court accepted Mr. Belling's assertion that the workers compensation he had received net of his attorney fees was only $19,278.82, and thereby $3,645.18 less than the amount he was being asked to repay to ESD.
Mr. Belling appeals the trial court's decision reducing the overpayment determination by only $3,645.18. ESD cross appeals the trial court's waiver of $3,645.18of the overpayment.
The Washington Administrative Procedure Act, chapter 34.05 RCW, governs our review of a decision by an ESD commissioner. Verizon Nw., Inc. v. Emp't Sec. Dep't, 164 Wn.2d 909, 915, 194 P.3d 255 (2008). We review only the commissioner's decision, not the administrative law judge's decision or the superior court's ruling. Id. We base our decision on the administrative record before the commissioner. Id.
Under the Employment Security Act, Title 50 RCW, an individual is disqualified from receiving unemployment insurance benefits with respect to any day or days for which he or she receives workers' compensation. RCW 50.20.085. RCW 50.20.190 authorizes the ESD to issue an overpayment assessment if this ineligibility applies, and imposes an obligation on the individual to repay unless the commissioner waives recovery. The commissioner "may waive an overpayment if the commissioner finds that the overpayment was not the result of fraud, misrepresentation, willful nondisclosure, or fault attributable to the individual and that the recovery thereof would be against equity and good conscience." RCW 50.20.190(2).
In Delagrave v. Employment Security Department, 127 Wn. App. 596 (2005), the lawyer representing Mr. Belling in this appeal asked this court to apply the "common fund" doctrine to ESD's right to recover overpayments in cases such as this, where a worker incurred attorney fees in recovering duplicative workers' compensation. Heargued there, as he does now, that in fairness, ESD should pay a pro rata share of the cost of the successful workers' compensation appeal. This court held that "[i]f the legislature had intended attorney fees to be available in overlapping benefits scenarios like the one here, the logical place to include such a provision would be within [RCW 50.32.160, 50.20.085, or 50.20.190]." Id. at 605. Because the legislature had not provided for payment of the worker's attorney fees, this court refused to read such a requirement into the Employment Security Act.
Sua sponte, however, this court raised the ESD commissioner's discretion to waive recovery of an overpayment under RCW 50.20.190 if the worker was not at fault and recovering the overpayment would be against equity and good conscience. Since the commissioner had not considered whether Mr. Delagrave's liability for attorney fees was a reason for waiving recovery of the overpayment, this court remanded, directing the commissioner to entertain an argument for waiver.
Thereafter, in In re Peltier, which the ESD commissioner has designated as precedential,2 the commissioner waived a portion of an overpayment of unemployment insurance benefits where the worker had incurred attorney fees in recovering theduplicative workers' compensation payments. In that case, the worker had received $9,581.00 in unemployment insurance benefits before she successfully appealed a DLI decision and received a duplicative award of retroactive workers' compensation in the amount of $10,351.56. After paying her lawyers, however, Ms. Peltier's net workers' compensation recovery was $7,230.00. The commissioner explained why a partial waiver was appropriate:
Here, the claimant argues that she should only have to repay $7,230 of her $9,581, since $7,230 is all that she received in workers' compensation after her attorney was paid. We believe that claimant's argument has merit in the instant case and is certainly reasonable when considering fundamental fairness of the claimant's situation. Accordingly, we hold that the claimant is liable for repayment of her overpayment in the amount of $7,230 and that $2351 of her overpayment is waived pursuant to RCW 50.20.190. See Delagrave.
A court may grant relief from an agency order in an adjudicative proceeding only if it finds one of the grounds identified by RCW 34.05.570(3). Mr. Belling contended in his petition for judicial review that the commissioner erroneously interpreted or applied the law. RCW 34.05.570(3)(d); CP at 213 ().
A Peltier analysis was included in the ALJ's conclusions of law in Mr. Belling's case, and was adopted by the commissioner. The commissioner concluded that reducing the $48,251.19 workers' compensation award by both the $14,475.36 contingent fee and$5,255.21 in costs still left Mr. Belling with a net award of $28,850.62...
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